Barclays to pay out £100m over loan blunders

Some 300,000 Barclays customers are to get surprise windfalls of hundreds of pounds as a result of a £100 million paperwork error by the banking giant.

The Canary Wharf headquarters of Barclays. Picture: Getty

From next month, affected customers will receive refunds of interest paid on personal loans – in some cases stretching back five years – with an average payout of more than £300.

Barclays, already under pressure for scandals involving rigging Libor and loan mis-selling, is also facing a £50m fine over claims it made secret payments to Middle Eastern investors. It admitted its latest blunder in a 185-page prospectus for a £5.8 billion cash call and blamed the error on technical issues with customers’ statements and arrears notices, such as failing to properly record changes to repayment dates.

That left the bank in breach of the Consumer Credit Act, forcing it to refund any interest paid since the mistake was made. Most of the affected customers were behind on loan payments, after borrowing sums of up to £25,000 to buy items such as engagement rings and cars.

The bank warned it may have made similar mistakes in its Barclaycard, Barclays Wealth and Barclays Corporate divisions.

Barclays said it was talking to the Office of Fair Trading to draw up plans to refund customers as “swiftly and efficiently as possible”.

A spokesman added: “Interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned. No customer will pay more than they were ever contractually expected to.”